Why Are Nonprofit Hospitals So Highly Profitable?

Healthcare has been recognized as a public good and most institutions providing healthcare services are tax exempt. Over the past decade and with the passage of the healthcare legislation, hospital and healthcare systems are called to justify their tax-exempt status. Hospitals have a critical role in the delivery of healthcare in communities across the nation. As nonprofit institutions, healthcare systems, insurers, and community healthcare centers have important fiduciary obligations to provide benefits to their communities commensurate with their tax-exempt status.  Hospitals vary in the participation in their community as required by IRS regulations. There has been limited focus on the public reporting of the community benefit activities of the hospital in their communities. Our goal is to develop a framework to assess and be responsive to the healthcare needs of the community. To help hospitals provide meaningful community service for their nonprofit status. 

 

Our vision for hospital and healthcare community benefit:

 

By 2023 all nonprofit healthcare institutions meet the IRS requirements for nonprofit status and provide timely, reliable and actionable information to their community.

 

The Citizens4health hospital community benefit rating grades the hospital based on the activities it undertakes to benefit their community. How do we as citizens hold hospitals accountable for taxes that are utilized for medical services and their tax-exempt status? The tax treatment of hospitals is reflected in the consensus of the public good of the services they provide. Are they good neighbors in their communities? How do they determine the community benefits activities that justify their tax-exempt status?  

 

Click here for resources about hospital community benefit

 

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The citizen-oriented rating of hospital community benefit is derived from the following categories the grade is totaled into the overall hospital rate in the hospital profile. As always our goal is to make all hospital tops and our grading reflects that fact.  Here is the overall grading scale and the scale for the following community benefit categories:

 

◊ Governance ◊  Community needs assessment and population served 

◊ Conflict of interest ◊ Collections policy ◊ Environment ◊ Communications and transparency  ◊  Community benefit activities ◊ Financial performance ◊ Executive compensation